No Agreement: A Businessperson’s Guide to a Narrow but Important Defense to Award Confirmation

What if your adversary obtains a default award against your business but your business never agreed to arbitrate the dispute?

Suppose your business receives an arbitration demand, but it never signed the alleged arbitration agreement, never otherwise agreed to arbitrate, and is not bound to an arbitration agreement under generally applicable state-law contract principles.  Your business promptly objects and refuses to appear in response to the arbitration demand and does not participate in the demanded arbitration.

Undaunted, the claimant proceeds, obtains a default award, waits until the Federal Arbitration Act (the “FAA”)’s three-month period for moving to vacate has expired, and then asks a court to confirm the award. Assume that if there were a binding arbitration agreement, then it would be governed exclusively by the FAA, not state arbitration law.

Must the Court confirm the award simply because your business failed to serve and file a Section 10(a) motion to vacate within FAA Section 12’s three-month limitation period for service of a motion to vacate under Section 10, or modify or correct the award under Section 11?

While the U.S. Supreme Court has not definitively decided the question, there is persuasive federal authority (including Supreme Court authority) suggesting the answer is “no”—provided the facts and applicable law establish that the business never agreed to arbitrate, was not otherwise bound, did not participate, and limited its defense to the parties’ failure to enter into an agreement to arbitrate.

Sections 10 and 12 of the FAA do not ordinarily operate that way. A  party that wants to vacate, modify, or correct an FAA-governed award must serve its application within Section 12’s short deadline and file it. A losing party ordinarily cannot wait for a confirmation application and then, after the three-month vacatur deadline has elapsed, oppose the application on Section 10(a) vacatur grounds—such as “the arbitrators exceeded their powers[.]” See 9 U.S.C. §§ 10(a)(4), 9-12; Florasynth, Inc. v. Pickholz, 750 F.2d 171, 175, 177 (2d Cir. 1984).

But this hypothetical—a true no agreement objection— presents an unusual and very different situation. It does not ask the court to address an arbitrator’s material violation of an arbitration agreement within the context of an agreed arbitration process. It denies that the supposed arbitration agreement ever existed in the first place. The distinction is narrow and fact dependent but consequential.

The FAA makes arbitration agreements valid and enforceable to the same extent as other contracts, and sets forth summary procedures for enforcing those agreements and awards resulting from them. The predicate for FAA applicability is an arbitration agreement falling within the scope of Sections 1 and 2 of the FAA. Without it, there is nothing on which the FAA’s provisions can, by their terms, have any force or effect. The statute’s deadlines and other procedural provisions should not apply when there is no agreement to arbitrate.

You should be able—in this limited and fairly rare factual scenario—to have a Court decide whether there exists the precondition for FAA enforcement: an arbitration agreement that has been formed and exists. But if it turns out that you were mistaken, and the parties did agree to arbitrate, then you will likely have forfeited or waived any other defense you might have against the application to confirm the default award.

The No Agreement Hypothetical That Presents the Strongest Defense

The defense is strongest where the business can establish all of the following:

1. It did not sign, accept, or otherwise assent to the arbitration agreement.
2. It is not bound through assumption, agency, alter ego, veil piercing, incorporation by reference, third-party-beneficiary status, estoppel, or another generally applicable state contract-law doctrine. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009).
3. It did not participate in selecting the arbitrator, presenting the merits, asserting counterclaims, requesting affirmative relief, or by otherwise invoking or recognizing the arbitral process.
4. When arbitration was demanded, it clearly and promptly objected in writing that it had not agreed—and would not agree—to arbitrate.
5. No court previously determined, in a proceeding binding on the business, that it was required to arbitrate.
6. At the confirmation proceedings, it challenges only the arbitrator’s authority over the business vel non—not the integrity of the proceeding, the arbitrator’s qualifications or impartiality, alleged procedural misconduct, or alleged manifest disregard of the parties’ agreement or the law.

These facts separate a true no agreement case from the far more common situation in which a signatory or other bound party argues that the arbitrator’s decision was not even arguably an interpretation of the contract; decided a non-arbitrable claim; committed prejudicial, procedural misconduct; or exceeded an otherwise existing grant of or limitation on authority. The objections ordinarily must be raised by a  Section 10 or 11 application timely served under Section 12. But the objection in our hypothetical is that the arbitrator never had any authority to decide any disputes between the parties because the parties never consented to it.

The Ordinary FAA Rule: Section 12 Is Strict

FAA Section 9 says that, when the parties have agreed that judgment may be entered on the award, the court “must grant” confirmation “unless the award is vacated, modified, or corrected as prescribed in” FAA Sections 10 and 11. 9 U.S.C. § 9. Section 12 requires “[n]otice of a motion to vacate, modify, or correct” to be served “within three months after the award is filed or delivered.” 9 U.S.C. §§ 9, 12.

Courts enforce the limitation period strictly. The Second Circuit’s Florasynth decision states that a party may not, after expiration of the period, assert grounds for a motion to vacate, modify, or correct even as a defense to confirmation. 750 F.2d at 175. Once the three months pass, a successful party ordinarily can assume that the award is immune from Section 10 or 11 attack, and summary confirmation should follow. Id. at 177.

That finality rule is central to the FAA. It prevents an arbitration loser from ignoring the deadline, waiting to see whether the winner pursues confirmation, and then litigating untimely Section 10 or 11 objections. But it presupposes the parties were beholden to the arbitral process because the were parties to or otherwise bound by an arbitration agreement.

Why a True No-Agreement Defense Is Different

The FAA’s first principle is consent, not coercion. (See, e.g., here.) Section 2 makes a written arbitration provision enforceable as other contracts. Section 4 requires the decisionmaker—ordinarily a court, provided the parties have not entered into an agreement clearly and unmistakably delegating arbitrability determinations to an arbitrator—to determine whether an arbitration agreement was made when that issue is genuinely disputed. Section 9 authorizes confirmation when “the parties in their agreement” agreed that judgment upon the award could be entered. Section 13 requires the agreement to be filed with the court as part of the confirmation record. 9 U.S.C. §§ 2, 4, 9, 13.

These provisions do not confer upon arbitrators adjudicatory power over persons who have not agreed to arbitrate and have not otherwise empowered them to decide any disputes. The Supreme Court has repeatedly emphasized that arbitration is “strictly a matter of consent” and that the first question in a dispute about arbitration is: To what have the parties agreed?  Coinbase, Inc. v. Suski, 602 U.S. 143, 148 (2024); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942-44 (1995). A contract ordinarily cannot bind a nonparty, and the FAA does not enlarge the range of parties or controversies covered by the agreement. EEOC v. Waffle House, Inc., 534 U.S. 279, 289, 294 (2002).

A no-agreement defense therefore attacks an antecedent condition to the FAA’s operation against the business. The business is not saying, “The arbitrator materially violated the parties’ arbitration agreement.” It is saying, “The parties never agreed to arbitrate any disputes and thus did not consent to the arbitrator making an award, let alone one on which the parties agreed the Court could under FAA Section 9 enter judgment. Under these facts the award proponent has not established the precondition for FAA enforcement– the existence of an agreement falling under the scope of FAA Sections 1 and 2.

This distinction is what New Prime Inc. v. Oliveira, 586 U.S. 105, 110-15 (2019) referred to as the FAA’s “sequencing[.]” 586 U.S. at 111.  The nation’s highest court explained, “antecedent statutory provisions limit the scope of the court’s powers under §§ 3 and 4.” 586 U.S. at 110. “Section 2[.]” continued the Court, “provides that the Act applies only when the parties’  agreement to arbitrate is set forth as a ‘written provision in any maritime transaction or a contract evidencing a transaction involving commerce.’” 586 U.S. at 110 (quoting 9 U.S.C. § 2). Section 1, said the Court, “helps define § 2’s terms[,]” including by setting forth the FAA’s transportation workers’ exemption. 586 U.S. at 110. (See here for a discussion of Section 1’s transportation workers’ exemption.)

“Given the [FAA’s] terms and sequencing,” explained the Court, a “court should[,]” “before ordering arbitration[,]” “decide for itself whether” there is an agreement that falls within the scope of the FAA’s coverage. See 586 U.S. at 111. For “to invoke its statutory powers under §§ 3 and 4 to stay litigation and compel arbitration according to a contract’s terms, a court must first know whether the contract itself falls within or beyond the boundaries of §§ 1 and 2.” The same is true of FAA’s post-award provisions, Sections 9-12, which, like Sections 3 and 4, do not apply in the absence of an agreement falling within the scope of Sections 1 and 2.

MCI v. Exalon: The Leading No Agreement Section 12 Decision

The leading domestic FAA authority is the First Circuit’s decision in MCI Telecommunications Corp. v. Exalon Industries, Inc., 138 F.3d 426 (1st Cir. 1998). MCI demanded arbitration under provisions of a Federal Communications Commission (“FCC”) telecommunications tariff.  The arbitration challenger did not participate. The arbitrator entered a default award. Exalon did not move to vacate, modify, or correct the award within the Section 12’s three-month deadline. When MCI later sought enforcement, Exalon defended on the ground that no written agreement bound it to arbitrate the dispute. Id. at 427-28.

The U.S. Court of Appeals for the First Circuit held that Section 12 did not bar the defense. It reasoned that the FAA’s enforcement provisions “do not come into play unless there is a written agreement to arbitrate.” Id. at 430. If no agreement exists, the alleged arbitrator’s acts have no force or effect as against the nonparty, and the nonparty’s failure to appear does not create an obligation to arbitrate that did not previously exist. Id.

Accordingly, a person contending that it is not bound may abstain and raise the absence of a written arbitration agreement as a defense to confirmation without being time-barred by Section 12. Id. at 430-31.

The Court analogized the situation to a default judgment entered without personal jurisdiction: a non-appearing person may later challenge the decisionmaker’s authority, but—if authority is established—may not use that collateral attack to reopen consideration of the merits. Id. at 430.

MCI also identified the decisive limitation. If the confirmation court later determines that an arbitration agreement existed and bound the non-appearing party, “the FAA would then fully come into operation, including the time limitations of section 12.” Id. That makes abstention a high-stakes strategy, not a safe harbor.

The First Circuit distinguished cases involving parties that participated in arbitration and later missed Section 12’s deadline. Participation in litigating the merits of the arbitration, the court explained, may at least bind the participant to the procedural requirements of the arbitral process. Id. at 430-31 (distinguishing Cullen v. Paine, Webber, Jackson & Curtis, Inc., 863 F.2d 851 (11th Cir. 1989), and Professional Administrators Ltd. v. Kopper-Glo Fuel, Inc., 819 F.2d 639 (6th Cir. 1987)). It also distinguished Comprehensive Accounting Corp. v. Rudell, 760 F.2d 138, 139-40 (7th Cir. 1985), because there the resisting parties had signed a contract containing an arbitration clause and conceded that the clause covered the dispute.

Other Federal Decisions Reinforce the No Agreement Principle

Although MCI is the clearest appellate decision on Section 12, other authorities reinforce its central distinction. In First Options, the Supreme Court held that courts ordinarily decide whether a person agreed to arbitrate arbitrability unless clear and unmistakable evidence shows otherwise. 514 U.S. at 943-46. The award challengers appeared before the arbitrators to contest jurisdiction, but their forceful objections did not demonstrate consent to let the arbitrators finally decide their own authority. Id. at 946-47. That decision does not interpret Section 12, but it confirms that an arbitrator’s assertion of jurisdiction, in the face of a party’s objection, cannot itself supply the missing agreement.

In China Minmetals Materials Import & Export Co. v. Chi Mei Corp., the Third Circuit held in a New York Convention case that a court asked to enforce an award must independently resolve a genuine contention that the underlying contracts—including the arbitration clauses—were forged. 334 F.3d 274, 288-90 (3d Cir. 2003). Chi Mei had participated only while repeatedly objecting to jurisdiction. The court held that its jurisdictional objection remained preserved absent a clear and unequivocal waiver. Id. at 289-90. The court added that, had the case arisen under the domestic FAA, First Options would have required the same threshold inquiry. Id. at 286.

More recently, in Spineway SA v. Strategos Group LLC, the Third Circuit held that a party did not waive its objection to an arbitrator’s authority by refusing to participate. No. 24-1584, slip op. at 3-4 (3d Cir. Mar. 18, 2025) (not precedential). The case (which is not precedential) arose under the New York Convention and concerned use of an arbitral institution different from the one the parties had selected, but the court expressly relied on MCI and explained that a party contending it is not bound may abstain and later object. Id. The court affirmed refusal to confirm because the tribunal was not constituted according to and in the manner required by the parties’ agreement. Id. at 4-6.

The overall picture is therefore strong but not perfectly uniform. MCI squarely supports the defense in the First Circuit. First Options, China Minmetals, and Spineway supply important formation, preservation, and enforcement principles. In the Second Circuit, Florasynth governs ordinary untimely vacatur defenses but, especially in light of New Prime, it is questionable whether Section 12 could govern an antecedent challenge to the existence of a Section 2-governed arbitration agreement. A business should expect the award proponent to argue that any objection is really an untimely Section 10(a)(4) excess-of-powers claim, not an antecedent Section 2 challenge.

Any counsel considering strategy in a no agreement case should carefully research applicable law to be sure there is not precedent, or even local, nonbinding district court cases, which might undermine or negate the position. If such cases are identified, counsel needs to thoroughly analyze them and devise and implement a strategy to address them.

Different Facts—Different Result

1. The Business Signed or Otherwise Became Bound

Lack of a signature does not necessarily mean no agreement exists. State contract law may bind a nonsignatory through assumption, agency, alter ego or veil-piercing principles, incorporation by reference, third-party-beneficiary status, waiver, or estoppel. Arthur Andersen, 556 U.S. at 631. Electronic assent, course-of-dealing evidence, or a subsequent agreement may also establish consent. If the court finds that the business was bound, MCI says the FAA—including Section 12—applies fully. 138 F.3d at 430.

2. The Objection Concerns Validity, Scope, or Outcome—not Existence of the Agreement

The no-agreement doctrine is not a way to repackage ordinary vacatur arguments. The award challenger’s contentions that the award was procured by fraud or undue means, or the arbitrator did not even arguably interpret the agreement or the law; exceeded a contractual limit; was guilty of corruption or evident partiality; awarded relief not even arguably authorized by the agreement; committed prejudicial, procedural misconduct; or otherwise denied the challenging party a fundamentally fair hearing, all generally presuppose the existence of an arbitration agreement. They therefore fall under Section 10, and are subject to Section 12’s three-month limitation period. That is also so for Section 11 grounds to modify or correct an award.

3. The Business Participated Without a Timely and Clear Objection

Participation can imply consent or waive an arbitrability objection. A party that, without clearly and timely objecting to arbitrability, selects the arbitrator, litigates the merits, seeks affirmative relief—or otherwise waits until an adverse award is made before denying the existence of an agreement—will likely be found to have consented to arbitration. See Opals on Ice Lingerie v. Bodylines Inc., 320 F.3d 362, 368-69 (2d Cir. 2003); Slaney v. International Amateur Athletic Federation, 244 F.3d 580, 591 (7th Cir. 2001). The later and less specific the objection, and the more inconsistent it is with the participation, the greater the risk of forfeiture, waiver, or estoppel becomes.

4. A Court Already Decided That the Business Must Arbitrate

If a court entered an order compelling the business to arbitrate after resolving formation or nonsignatory issues, the business generally cannot treat confirmation as a fresh opportunity to relitigate that ruling. Appellate deadlines, issue preclusion, law-of-the-case principles, and the particular procedural posture may control. A party that disagrees with a judicial arbitrability ruling must preserve and pursue the available judicial remedies at the appropriate time.

5. The Business Agreed to Delegate Arbitrability

Parties may clearly and unmistakably agree that an arbitrator will decide threshold arbitrability questions. Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 65, 69-71 (2019). But a delegation clause is itself an arbitration agreement. A court still must determine whether the resisting business formed or became bound by that delegation agreement. Coinbase, 602 U.S. at 149-51; New Prime, 586 U.S. at 112-15. A person cannot be bound to a delegation clause merely because the document someone else signed contains one.

What Happens If the Court Finds the Business Agreed to Arbitrate or Was Otherwise Bound?

This is the central risk. The business may believe, even reasonably, that it never agreed to arbitrate. But if the confirmation court finds signature, assent, agency, estoppel, assumption, or another basis for binding it, the business’s premise collapses. Under MCI, the FAA then applies in full, including Section 12’s deadline. 138 F.3d at 430. There may, of course, be an appeal, but that does not mean the business’s appeal will be successful.

The business may still litigate the threshold formation question and any factual disputes necessary to decide it. See 9 U.S.C. § 4; MCI, 138 F.3d at 429-31. But absent a timely motion to vacate, it ordinarily cannot pivot to Section 10 or 11 grounds and argue that the arbitrator committed fraud-related error, or was guilty of evident partiality, procedural misconduct, exceeding powers, manifest disregard of the law or the agreement, or some other Section 10 or 11 ground. Its authority challenge may fail while its vacatur, correction, or modification challenges are already time-barred.

That is why a business facing an adverse award should not rely casually on the no-agreement doctrine. Even when the threshold no-contract defense appears strong, counsel should determine the Section 12 deadline immediately. If there are possibly legitimate Section 10 or 11 grounds that might be preserved in the event the no-agreement challenge fails, then counsel should consider filing and serving within the three month time limit a claim for declaratory relief as to the non-existence of the arbitration agreement, and, in the alternative, and under an explicit reservation of rights, a  motion to vacate, modify, or correct the award under Sections 10 and 11.

The ability to request this kind of alternative relief under a reservation of rights in a given set of circumstances may be jurisdiction specific. There may also be alternative ways of seeking this kind of relief. Counsel contemplating such a strategy should analyze and research it fully to, among other things,  avoid or at least attempt to mitigate the risk of forfeiture or waiver.

But it may, subject to applicable law, turn out that moving under Section 10 or 11 in the alternative on a timely basis may be safer than betting everything on a favorable ruling on contract existence. For that ruling may or may not materialize, depending on the facts and applicable law.

Can the Business in a No Agreement Case Participate in the Arbitration Under a Strict Reservation of Rights?

Possibly—but this is the closer question the hypothetical deliberately avoids. First Options shows that appearing before arbitrators to contest their jurisdiction does not automatically establish consent. 514 U.S. at 946-47. China Minmetals likewise held that a party that repeatedly objected to jurisdiction, yet participated to demonstrate that the contracts were forged, preserved its objection absent a clear and unequivocal waiver. 334 F.3d at 289-90. And Opals on Ice recognizes that a party that clearly and explicitly reserves its arbitrability objection may participate without necessarily forfeiting later judicial review. 320 F.3d at 368-69.

But participation creates factual and legal risk that complete abstention does not. The award proponent may argue that the business impliedly agreed, waived its objection, submitted arbitrability to the arbitrator, or accepted the tribunal’s benefits while reserving only a post-loss escape route. The analysis may turn on what the business did, not merely what its reservation letter said.

Conclusion

On the strongest hypothetical—no assent, no state-law basis for binding the business, no participation, a prompt objection, and no prior judicial determination—the better reading of the FAA and the leading authorities is that the business may oppose confirmation on the threshold ground that no arbitration agreement authorized the award made against it. MCI provides the clearest Section 12 support; First Options, New Prime, Coinbase, China Minmetals, and Spineway reinforce the consent and sequencing principles.

If the court finds that the business did agree or is otherwise bound, however, the ordinary FAA rules apply with full force—including Section 12’s deadline. That possibility makes early, careful, and alternative planning, research, and analysis essential.

This article is for general informational purposes and, like all other Arbitration Law Forum articles, is not legal advice. It also does not purport to be an exhaustive recitation of all applicable law that may bear on the issues discussed  in any particular jurisdiction. In any event, the applicable law and deadlines, and their interpretation and scope, depend on the agreement, award, forum, and the facts, and are subject to judicial interpretation. 

Some Additional Related Arbitration Law Forum Resources:

1. Unfavorable Arbitration Award? A Businessperson’s Guide to Vacating, Modifying or Correcting FAA-Governed Awards

2. Arbitration Law FAQs: Confirming Arbitration Awards under the Federal Arbitration Act

Contacting the Author

If you have any questions about this article, arbitration, arbitration law, or arbitration-related litigation, then you may contact the author, Philip J. Loree Jr. at (516) 941-6094 or PJL1@LoreeLawFirm.com.

Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has more than 35 years of experience representing a wide variety of domestic and international corporate, other entity, and individual clients in trial-court and appellate matters arising under the Federal Arbitration Act—including matters arising under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. He also has significant experience arbitrating and litigating insurance- and reinsurance-related and other commercial disputes, and in advising clients and co-counsel in arbitration-law-related matters.

ATTORNEY ADVERTISING NOTICE: Prior results do not guarantee a similar outcome.

Photo Acknowledgment

The photo featured in this post was licensed from Yay Images and is subject to copyright protection under applicable law.

Tags: Agreement to Arbitrate, arbitration award confirmation, arbitration consent, FAA Section 10, FAA Section 11, FAA Section 12, FAA Section 9, First Options, MCI v. Exalon, New Prime, nonsignatory arbitration, oppose confirmation, reservation of rights

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